Roundup: Budget reinforces Hong Kong's long-term economic development

Hong Kong's Financial Secretary John C Tsang has pledged to explore new ideas and strive for diversity to help Hong Kong people realize their aspirations in his 2015-16 Budget delivered on Wednesday.

The government of Hong Kong Special Administrative Region will introduce six one-off relief measures amounting to 34 billion HK dollars (about 4.4 billion U.S. dollars) in 2015 to help alleviate the financial burden on the public and stabilize the economy, said the official.

The six measures include reducing salaries tax and tax under personal assessment for 2014-15 by 75 percent benefiting 1.82 million taxpayers, reducing profits tax for 2014-15 by 75 percent benefiting 130,000 taxpayers and waiving rates for the first two quarters of 2015-16 benefiting 3.15 million properties.

Tsang estimated that Hong Kong's economic growth will expand by 1 to 3 percent this year and the headline inflation rate for 2015 as a whole will be 3.5 percent with an underlying inflation rate at 3 percent.

In 2014, Hong Kong's economic growth was 2.3 percent and the inflation rate was 3.5 percent, according to Tsang.

"In particular, I shall make the best use of resources generated by the community's efforts, and continue to care for the disadvantaged and promote sustainable development, so that people from different sectors, as well as our next generations, can share the benefits of economic growth," the secretary said.

Tsang promised targeted support for the cultural and creative sector, with a view to inspiring creativity in the community, diversifying the economy and expanding market opportunities.

CULTURAL, CREATIVE MEASURES

According to Tsang, the cultural and creative measures include:

-- Injecting an additional 400 million HK dollars into the CreateSmart Initiative to support different sectors and provide talented people with training programs, as well as overseas exchanges and internships;

-- Launching a 500-million-HK-dollar, three-year pilot program for Hong Kong's fashion industry;

-- Initiating a 300-million-HK-dollar Art Development Matching Grants Pilot Scheme, under which private donations and sponsorship secured by eligible local arts groups will be matched by government grants; and adding 200 million HK dollars to the Film Development Fund and introducing a subsidy scheme for film productions with a budget not exceeding 10 million HK dollars, to boost the volume of local film production and nurture film talent.

Tsang said he was encouraged by the number of start-ups in Hong Kong. He said that start-ups developed by the Hong Kong Science and Technology Parks Corporation (HKSTPC) and Cyberport had attracted hundreds of millions of dollars in investment.

To further promote the financing of new enterprises, Tsang said the HKSTPC would earmark 50 million HK dollars to set up a corporate venture fund on a matching basis with private funds. The money would be invested in start-ups that were either located in the Science Park or had participated in one of its incubation programs. Tsang also earmarked 150 million HK dollars for a new phase of the Enhancing Self-Reliance Through District Partnership Program, covering 2016-17 to 2019-20.

He said the money would be used to encourage commercial sector participation in social enterprises and promote a greater variety of social enterprises.

HUMAN RESOURCES DEVELOPMENT, HEALTH-CARE, RETIREMENT PROTECTION

Secretary Tsang said that human resources development was a central aspect of the Budget. "The Government has devoted substantial resources to improving the quality of manpower to further diversify the economy and steer our development towards high value-added activities," he said.

Tsang unveiled a number of human resources' initiatives in his Budget, which include 960 million HK dollars for a pilot program allowing 1,000 students per cohort to pursue designated self- financing undergraduate programs that reflect Hong Kong's manpower needs.

A total of 130 million HK dollars will be allocated to strengthen child-care services. The funds will also help more women join the workforce;

The Integrated Employment Assistance Program for Self-reliance will be extended for two years with 220 million HK dollars. The program encourages employable, able-bodied recipients of the Comprehensive Social Security Assistance Scheme to gain employment.

Beyond creating employment opportunities for women and older people, Tsang's Budget targeted health-care and retirement protection. He reiterated the Chief Executive's January Policy Address announcement that 50 billion HK dollars would be set aside to provide better retirement protection for the elderly in need.

MEASURES TO RELIEVE SECTORS AFFECTED BY "OCCUPYING CENTRAL"

Besides the above long-term measures, the secretary said he will launch a series of short-term measures to support affected sectors during the "Occupying Central" movement of last year.

Tsang said a total of 18,000 travel agents, 2,000 hotels and guesthouses, 26,000 restaurants and operators, and transportation sector will be benefited from the budget.

"More importantly, we need to rebuild international investors' and tourists' confidence in Hong Kong and uplift our international image," said Tsang.

"I shall allocate an additional 80 million HK dollars for the Hong Kong Tourism Board (HKTB) to step up its promotion efforts in the coming year," he said.

"These activities will include running overseas promotions, organizing shopping festivals and offering merchandise concessions and electronic discount coupons in collaboration with the retail industry, and arranging large-scale familiarization tours to Hong Kong for overseas trade missions," Tsang added.

Tsang said this series of support measures and promotion efforts, costing 290 million HK dollars, will render the affected sectors some tangible assistance, help rebuild confidence in Hong Kong, and enhance Hong Kong's image.

Meanwhile, Tsang offered a range of initiatives to develop Hong Kong's pillar industries: trading and logistics, tourism, business and professional services, and financial services.

For the financial sector, Tsang announced that he would launch an inflation-linked retail bond, or iBond, issue of up to 10 billion HK dollars, with a maturity of three years. The issuance would target Hong Kong residents.

The secretary also said that Hong Kong was also exploring a closer economic partnership arrangement with Macao and that Hong Kong Special Administrative Region government will discuss with the Walt Disney Company the Phase 2 development of Hong Kong Disneyland Resort. Endi